Exam 10: Production and Cost

Dr.Khan starts his own dental practice after quitting his $150,000 job at The Mall Dental Clinic.His revenues for the first year are $500,000.He paid $90,000 in rent for the dental office,$60,000 for his office manager's salary,$24,000 for the dental hygienist,$150,000 for insurance,and $6,000 for other miscellaneous costs.The normal profit from running his business is $20,000.Which of the following statements is true?

Total cost includes

Average total cost equals

The difference between a firm's total revenue and its total cost is its ________ profit.

Jill runs a factory that makes lie detectors in Little Rock,Arkansas.This month,Jill's 34 workers produced 690 machines.Suppose Jill adds one more worker and,as a result,her factory's output increases to 700.Jill's marginal product of labor from the last worker hired equals ________.

The U-shape of the average variable,average total,and marginal cost curves reflects

-The table above shows a total product schedule.Suppose that labor costs $20 per worker and fixed costs are $60.The average total cost of producing 80 units equals ________ per unit.

A firm's fundamental goal is

-The table above gives costs at Jan's Bike Shop.Unfortunately,Jan's record keeping has been spotty.Each worker is paid $100 a day.Labor costs are the only variable costs of production.What is the total cost of producing 50 bikes?

In the short run,firms increase output

-The above table gives some production and cost information for Flaming Fernando's,a restaurant that sells Fiery Frijoles.What is the average variable cost of producing 1,000 frijoles?

Total cost is equal to the sum of

A firm increases its output and its average total costs remain unchanged.Is the firm experiencing increasing returns to scale,constant returns to scale,or decreasing returns to scale?

When the marginal product of an additional worker is less than the marginal product of the previous worker,there are ________ returns to labor.

The change in cost that results from a one-unit increase in output is called the

Accountants calculate

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.When does the average product of labor equal the marginal product of labor?

Scott owns a law-enforcement training operation in Boise,Idaho.He employs three trainers.The last trainer Scott hired increased Scott's total cost by $466 per week even though the trainer brought in only one new client.Hence Scott's

-The table above shows the total product schedule for Rick's Lawn Service,a yard care company.Increasing marginal returns

When Ford hires Ernst and Young Consulting to help Ford redesign its marketing,Ford's payment to Ernst and Young is classified as